KY Bar Contracts and Uniform Commercial Code 3 — Questions and Answers
Question 1: Two merchants exchange forms: the buyer's purchase order is silent on arbitration, and the seller's acknowledgment adds an arbitration clause that materially alters the deal. Both perform. Is arbitration part of the contract?
- Yes, because the last form sent controls under the mirror image rule
- No, because between merchants a material alteration does not become part of the contract (Correct answer)
- Yes, because performance always accepts all added terms
- No, because contracts between merchants must be identical or void
Correct answer: No, because between merchants a material alteration does not become part of the contract
Under UCC § 2-207, additional terms between merchants drop out if they materially alter the agreement.
Question 2: A homeowner promises to pay a landscaper $2,000 for work the landscaper already completed voluntarily last month. The homeowner later refuses to pay. Is the promise enforceable?
- No, because past consideration is not valid consideration (Correct answer)
- Yes, because the landscaper conferred a real benefit
- Yes, because moral obligation always supports a promise
- No, because landscaping contracts must be in writing
Correct answer: No, because past consideration is not valid consideration
A promise made in exchange for services already performed lacks bargained-for consideration.
Question 3: A seller contracts to deliver goods "F.O.B. seller's warehouse, Lexington." The goods are destroyed in transit through no fault of either party. Who bears the loss?
- The seller, because risk of loss passes only on the buyer's receipt
- The carrier, because carriers are strictly liable for all shipments
- Both parties split the loss equally
- The buyer, because risk of loss passed when the goods were delivered to the carrier (Correct answer)
Correct answer: The buyer, because risk of loss passed when the goods were delivered to the carrier
In a shipment contract (F.O.B. seller's location), risk of loss passes to the buyer when the seller duly delivers the goods to the carrier.
Question 4: A minor purchases a car, drives it for six months, then disaffirms the contract and returns the damaged car. In most jurisdictions, what may the minor recover?
- Nothing, because using the car ratified the contract
- The price minus the fair rental value and damage
- The full purchase price, because a minor may disaffirm and need only return what remains (Correct answer)
- Only half the purchase price as an equitable compromise
Correct answer: The full purchase price, because a minor may disaffirm and need only return what remains
Under the majority rule, a disaffirming minor must only return the goods in their current condition and may recover the price paid.
Question 5: A wholesaler repudiates a contract to buy 1,000 units at $50 each. The seller resells the units in a commercially reasonable private sale for $40 each after notifying the buyer. What are the seller's damages?
- $10,000, the difference between contract price and resale price, plus incidental damages (Correct answer)
- $50,000, the full contract price
- $40,000, the resale proceeds
- Nothing, because resale waives all remedies
Correct answer: $10,000, the difference between contract price and resale price, plus incidental damages
UCC § 2-706 gives a seller who properly resells the contract-resale price differential plus incidental damages.
Question 6: A landowner promises a charity $50,000 for a new library wing. Relying on the pledge, the charity signs binding construction contracts. The landowner revokes. What is the charity's best theory?
- Breach of an option contract
- Promissory estoppel, because the charity foreseeably and detrimentally relied on the pledge (Correct answer)
- Quasi-contract for unjust enrichment
- No recovery, because charitable pledges are never enforceable
Correct answer: Promissory estoppel, because the charity foreseeably and detrimentally relied on the pledge
Promissory estoppel enforces a promise when the promisor should expect reliance and the promisee detrimentally relies.
Question 7: A contract requires a farmer to deliver crops "from the farmer's north field." A flood destroys the entire north field before harvest. What is the farmer's position?
- The farmer must buy equivalent crops on the open market
- The farmer is liable for breach because crop contracts are absolute
- The contract converts to a cash-settled futures contract
- Performance is excused by impracticability because the agreed source of supply was destroyed (Correct answer)
Correct answer: Performance is excused by impracticability because the agreed source of supply was destroyed
Destruction of a specifically identified source of supply excuses performance under impracticability doctrine and UCC § 2-615.
KY Bar Contracts and Uniform Commercial Code 3
Two merchants exchange forms: the buyer's purchase order is silent on arbitration, and the seller's acknowledgment adds an arbitration clause that materially alters the deal.
Both perform.
Is arbitration part of the contract?